Will Labour’s VAT plans threaten independent schools?

On behalf of Attwaters Jameson Hill posted in Private Wealth on Wednesday, February 28th, 2024

With the UK’s next general election fast approaching, the Conservative and Labour parties are beginning to ramp up their promises and pledges for Britain’s future as they commence their battle for the public’s vote.

One such pledge from Labour poses a serious threat to the independent school system and the educational careers of many private schoolchildren. Late last year, Labour announced plans to charge 20% VAT and end business rate relief for independent schools if it wins the election – a move that could lead to a £3,000 per year hike in school fees. The money raised would be funnelled into the state schooling system, the party said, contributing to narrowing the gap between the private and state sectors.

A knock-on impact on parents

It is a policy that private schools fear could render fees unaffordable for a significant proportion of parents, who already have to make significant sacrifices to send their children to these schools.

Despite Labour’s undoubtedly good intentions, the proposed policy has come under fire from numerous critics. Paul Johnson, Director of the Institute of Fiscal Studies, says that the money that would be raised by such a policy would, viewed in the context of the overall national budget, make very little difference to ending elitism and bridging the gap between state and independent schooling.

Meanwhile, the Independent Schools Council (ISC) Chairman, Barnaby Lenon, commented: “Adding 20 per cent VAT to school fees is going to mean that for some parents the fees become unaffordable. VAT may have the effect of making independent schools more elitist and as usual, the children and families to suffer the most are those in the lowest income and the greatest need.”

Continuing your child’s private education

As we have explored in many editions of our private wealth guide, private schooling offers so many benefits and a real head-start in life to thousands of children and young people. For example, nearly six in 10 (58%) A-level entries from independent schools are awarded the top two grades of A* or A, compared with one in three (33%) of state school entries.

It is completely understandable that parents will be very concerned about rising fees and their ability to continue affording them. However, there are options available to help keep your children at your chosen school.

Currently, over 180,000 pupils at ISC independent schools receive help with their fees – that’s over a third of all pupils. According to the ISC, 80% of schools provide this support themselves, with this assistance valued at over £1bn every year. So, it is worth asking your child’s school whether they offer any funding options or payment plans.

Given that all independent school parents will be facing the same situation should Labour’s proposals go ahead, however, the support available from private schools may be limited. It is therefore also worth consulting with your financial adviser ahead of time in order to plan how you might raise the additional sum that could be due on your children’s school fees.

Affordable private schooling in Hertfordshire and Essex

School fees vary from independent school to independent school, meaning that parents can select a high-quality school that suits the resources they have available. The King’s School in Harpenden, for example, caters for pupils from reception to Year 11, offers affordable termly fees and provides sibling discounts for parents with more than one child at the school.

At Holmwood House, a prep school in Colchester, Essex, fees start at a little more than £10,500 for the school year and the school offers a monthly interest-free payment scheme for parents. And at Gosfield School, termly fees range between £3170 and £4,695 for prep school children and between £5,795 and £6,620 for senior school pupils, with generous loyalty discounts available depending on how long the child has been at the school.

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